hen I "predicted" the coming Reno real estate housing crash six years ago, one of the most illuminating data was building permits and housing starts. What is a building permit and housing start? Building permits: a document authorizing the holder to construct a building of a particular kind on a particular lotHousing starts: the beginning of construction of a new house.
This is an important economic indicator that tells us what home builders are doing -- are they bullish on the market or are they sheepish based on paltry demand they're experiencing from home buyers.
From what I've seen the last six years, you can learn a lot about the general real estate market by watching what national home builders are doing (or not doing). This is the building permits and housing starts graph/article I wrote from 2007
:Raw Numbers:Housing Starts 2006 (United States)
Dec- 1,643,000Building Permits 2006 (United States)
It wouldn't require a college degree for someone to clearly see that's something bad is already happening in the market. Building permits and starts fell to historical lows -- and more tellingly -- the speed of the drop.This is where we are right now (most current permits and starts data I found):
I love this graph as it clearly shows us what happened the last 7 years. It's interesting that the timing is impeccable as well -- peak of the housing market 2005, lowest point at 2009 and subsequent bounce back the following three years.
Follow building permits and housing starts -- way better and could be trusted more than listening to professional real estate pundits on T.V. and newspapers.